Outsourcing Providers Equates to Insurance Companies

Filed in archive Outsourcing Issues on June 19, 2007

Companies often expect that outsourcing providers would be the one to shoulder the cost of unexpected charges in outsourcing. This is not true.

All outsourcing deals could face hidden charges and this should not be the sole responsibility of the outsourcing company. It must also be shouldered by the company because they are directly concerned with it. As I've mentioned before, preparing for the worst is something that companies should practice and not only outsourcing vendors.

The article, Seven Myths in Outsourcing offers a piece of advice when it comes to this kind of situation:

"Rather than spending inordinate time negotiating unrealistic contractual clauses in case of failure, clients and vendors should concentrate on understanding the process as it operates. They should identify acceptable rates of error based on real data, and -- jointly -- invest in understanding and eliminating the problems."